First Majestic cutting costs despite record Q3

First Majestic Silver Corp. [FR-TSX; AG-NYSE; FMV-FSE] on Monday October 15 said production in the third quarter of 2018 reached a new company record of 6.7 million silver equivalent ounces.

Total production consisted of 3.5 million ounces of silver, 35,260 ounces of gold, 4.4 million pounds of lead and 1.2 million pounds of zinc.

Silver production for the first three quarter of 2018, totaled 8.4 million ounces, or 15.8 million silver equivalent ounces. That was in line with the 2018 production guidance of between 12.0 and 13.2 million silver ounces or 20.5 to 22.6 million silver equivalent ounces.

Consolidated cash costs are expected to be US$7.18-$7.75 with all-in sustaining costs expected to be US$14.53 to $15.83/oz, the company has said.

Silver was trading Monday at US$14.68/oz on Monday.

“We had a very strong quarter with total production achieving a new record of 6.7 million silver equivalent ounces, representing a 31% increase compared to the prior quarter,” said Keith Neumeyer, First Majestic’s President and CEO.

First Majestic shares advanced 2.75% or 22 cents to $8.23 on Monday. The 52-week range is $11.09 and $6.24.

First Majestic is a Mexico-focused mining company. It owns and operates six producing silver mines – Parrilla, San Martin, La Encantada, Del Toro and Santa Elena silver mine.

Its asset portfolio also includes the San Dimas mine following the acquisition of the site’s former owner Primero Mining Corp. in May 2018 for $187 million in common shares of First Majestic. Under a new streaming agreement, Wheaton Precious Metals Corp. [WPM-TSX, NYSE] is entitled to receive 25% of the gold equivalent production from San Dimas.

“The record quarter was primarily due to the company receiving a full quarter of production from the San Dimas operation, along with increases in consolidated silver and gold grades of 19% and 35% respectively,” Neumeyer said.

“In fact, five of our six mines recorded higher production levels as a result of these significant grade improvements,” he said.

However, due the prolonged weakness in the silver price the company has implemented a 20% cost reduction program across all areas of the business which is expected to be fully realized by the first quarter of 2019.

The La Guitarra operation was placed on care and maintenance on August 3, 2018 and reflects only 33 operating days during the quarter.

During the quarter, San Dimas produced 1.4 million ounces of silver and 21,910 ounces of gold for a total production of 3.2 million silver equivalent ounces, reflecting a 90% increase in comparison to the prior quarter.